Near-future quarterly financial projections

[EVNow]

77,634 M3s@50K with 17,722 S/X@$97K = $5.6B. You list total auto at $5.3B. The numbers don't add up? Q2 S/X ASP appears to closer to $80K?

Did you remove the leased vehicles from deliveries ?

 

[Thekiwi]

How much are people allowing for increased tariff hit in Q3 due to increased tariff on imported parts from China? For instance there is a multi-hundred dollar hit on the Computer correct?

 

[Doggydogworld]

There's probably going to be an uptick in capex due to GF3 expansion a lot of equipment being installed there, which would reduce FCF even if much of the cost of the equipment is paid over several quarters.

I still say building and equipment will be leased and not hit the capex line. Even if I'm wrong I don't see much of a hit in Q3. Fremont Model 3 line had much longer payment delays.

Tooling could hit in Q4, perhaps partially in Q3.

 

[Reinhard]

Did you remove the leased vehicles from deliveries ?

77,643+17,722 = 95,365. Leased vehicles are accounted for. Is my math wrong? How did you derive the $97K figure?

 

[EVNow]

77,643+17,722 = 95,365. Leased vehicles are accounted for. Is my math wrong? How did you derive the $97K figure?

You have to remove the leased cars from that 95k figure as only a portion of the revenue is recognized in that quarter.

For Q2, since both deliveries and revenue are known, we can estimate the ASPs. My assumptions are a little different, so I have different numbers from b2b’s.

 

[Reinhard]

You have to remove the leased cars from that 95k figure as only a portion of the revenue is recognized in that quarter.

For Q2, since both deliveries and revenue are known, we can estimate the ASPs. My assumptions are a little different, so I have different numbers from b2b’s.

Thanks. So 15,902 S/X and 73,312 M3 straight sales. $5.16B in non-lease revenues. 73,312@50K=$3.66B. 15,902 S/X @$94480 = $1.50B. That works out much better. Thanks.

Conversely, total lease revenues were $0.21B. 1820s+4322m=$208,326,000 yields a line that hits $50,000 and $27,000. Looks like they are recognizing around 50% of the revenues initially from leases.

 

[Doggydogworld]

Thanks. So 15,902 S/X and 73,312 M3 straight sales. $5.16B in non-lease revenues. 73,312@50K=$3.66B. 15,902 S/X @$94480 = $1.50B. That works out much better. Thanks.

Conversely, total lease revenues were $0.21B. 1820s+4322m=$208,326,000 yields a line that hits $50,000 and $27,000. Looks like they are recognizing around 50% of the revenues initially from leases.

Lease revenue includes monthly payments from all cars leased the past ~3 years.

There used to be very roughly 30k S/X in the lease fleet, but that number has fallen recently. Model 3 lease fleet is just getting started, of course.

 

[Singer3000]

So going by luv's numbers, very loosely: with the current cost structure, Model 3 margins stuck in the high teens and only 80k deliveries S&X per year, to reach GAAP breakeven we'd be looking at Tesla needing to sell about 7.5-8k Model 3s per week.

Ignoring the ramp costs and accounting treatments flowing out of Shanghai also of course.

Things that could surprise to the upside this quarter or next might be S&X volumes or gross margin, FSD income (non-cash item though) and potentially Model 3 gross margin.

 

[Josuke]

Any speculation on the amount of revenue recognized due to the OTA update of V10?

I understand that they'll recognize revenue for FSD due to Smart Summon, but there is some deferred revenue due to specifically the Over the Air updates feature.

My assumption is that the revenue deferred would be equivalent to the overheard cost of the OTA engineering team over the course of the 8 year life of the vehicle. I wonder if there could be a revenue recognition for V10 where the gross margin is greater than 0%. Any insight from anyone with the accounting skills?

Also, it is interesting that they deployed Smart Summon only to the US market. They'll be able to recognize revenue for those US cars in Q3, but it also still leaves the opportunity for them to recognize revenue for Smart Summon in other quarters for when they finally unleash it in other markets ie EU and China.

 

[mongo]

My assumption is that the revenue deferred would be equivalent to the overheard cost of the OTA engineering team over the course of the 8 year life of the vehicle. I wonder if there could be a revenue recognition for V10 where the gross margin is greater than 0%. Any insight from anyone with the accounting skills?

Deferred revenue is the percentage of the option feature set not yet delivered.
R&D is expensed in the quarter it accures, and does not go into COGS. Having new features released is pure profit.

 

[Thekiwi]

How much are people allowing for increased tariff hit in Q3 due to increased tariff on imported parts from China? For instance there is a multi-hundred dollar hit on the Computer correct?

So no guesses on this? Has no one factored it into their estimates?

 

[EVNow]

So no guesses on this? Has no one factored it into their estimates?

Difficult to look at this in isolation. There are some cost reductions too, but we don’t know how much. All we can do is guess how much and in what direction the margin and ASP change.

 

[ReflexFunds]

Deferred revenue is the percentage of the option feature set not yet delivered.
R&D is expensed in the quarter it accures, and does not go into COGS. Having new features released is pure profit.

It is possible that some deferred revenue is for obligations Tesla will eventually fund with R&D or SG&A costs rather than COGs, so some deferred revenue could actually be 100% gross margin (but 0% EBIT margin). It's always hard to know the full granularity of a company's accounting though.

But I agree there may well be timing impacts between revenue (which may be lumpy) and cost recognition (which may be continuous).

 

[luvb2b]

on asp, i have mentioned it before but worth repeating: the s/x asp the way it is calculated in my model is everything in auto that is not model 3, leasing, credit, or known-one timer divided by units. it is not merely s/x revenue divided by units. so that number i estimate for s/x asp should always be higher than the true s/x asp (which afaik is not reported anyway).

that said, if after accounting for these two things you feel there's still a computational error give me some specifics of where you think it should be and i am happy to go recheck everything.

77,634 M3s@50K with 17,722 S/X@$97K = $5.6B. You list total auto at $5.3B. The numbers don't add up? Q2 S/X ASP appears to closer to $80K?

 

[luvb2b]

inside-evs posted usa s/x estimates and they are quite a bit lighter than i thought. so my estimates for s/x deliveries at 19k likely too high.

i'd go with something closer to 16k given the inside-evs estimate. units would shift into 3's as i think the overall count is probably still just under 100k. bottom line impact rough it out at approx 15c a share lower eps. (approx 25m usd lower gross profit).

 

[mrdoubleb]

inside-evs posted usa s/x estimates and they are quite a bit lighter than i thought. so my estimates for s/x deliveries at 19k likely too high.

i'd go with something closer to 16k given the inside-evs estimate. units would shift into 3's as i think the overall count is probably still just under 100k. bottom line impact rough it out at approx 15c a share lower eps. (approx 25m usd lower gross profit).

They may be closer, or you may be closer - we will probably never know exactly. At the risk of parroting the same hing in a third thread now, I would recommend everyone reads their editorial published yesterday that says that while their past estimates were based on a number of data sources, by now they have none of those available. So it is an estimate, an educated guess, just like yours.

 

[luvb2b]

updating model with latest deliveries, gotta bring estimates down vs my last post.

a big problem is the higher than expected lease percentages which reduce realized revenue this period. cash flow could be better due to inventory draw on model s/x.

…

…

s deliveries

x deliveries

s+x deliveries

3 deliveries

3 production

lease 3s % veh

lease s/x % veh

avg price s+x (calc'd)

avg price model 3 (set)

revenue

auto sales ex 3

auto sales mod 3

auto leasing

zev+nonzev credits

1 time revenue

total auto

energy storage

solarcity

grohmann

services/other

total revenue

cost of revenue

auto sales ex 3

auto sales mod 3

auto leasing

1 time cogs

total auto

energy storage

solarcity

grohmann

services & other

total cost of rev

gross profit

auto ex 3 ex credits gm

auto gaap gm

auto lease gm

auto gaap ex 3 gm

model 3 gm ex credits

auto-credits incl 3 gm

storage gm

scty gm

maxwell/grohmann

services gm

opex

tesla r&d

tesla sg&a

1 time costs

solarcity r&d

solarcity sg&a

total opex

op income

interest inc

interest exp

scty interest

other income exp

1time scty gain

pretax income

income tax

net income

non-cont int.

net inc to common

basic shares

diluted shares

diluted gaap eps

gaap net income

+ stock based comp

+ one time scty

non-gaap net income

non-gaap diluted eps

[TD2] luv est [/TD2][TD2] tsla [/TD2][TD2] tsla [/TD2][TD2] tsla [/TD2] [TD2] Sep-19 [/TD2][TD2] Jun-19 [/TD2][TD2] Mar-19 [/TD2][TD2] Dec-18 [/TD2] [TD2]8,700[/TD2][TD2]8,787[/TD2][TD2]6,000[/TD2][TD2]13,500[/TD2] [TD2]8,700[/TD2][TD2]8,935[/TD2][TD2]6,091[/TD2][TD2]14,107[/TD2] [TD2] 17,400 [/TD2][TD2] 17,722 [/TD2][TD2] 12,091 [/TD2][TD2] 27,607 [/TD2] [TD2] 79,600 [/TD2][TD2] 77,634 [/TD2][TD2] 50,900 [/TD2][TD2] 63,359 [/TD2] [TD2] 79,837 [/TD2][TD2] 72,531 [/TD2][TD2] 62,950 [/TD2][TD2] 60,000 [/TD2] [TD2] 0.08 [/TD2][TD2] 0.06 [/TD2][TD2] - [/TD2][TD2] - [/TD2] [TD2] 0.15 [/TD2][TD2] 0.10 [/TD2][TD2] 0.11 [/TD2][TD2] 0.13 [/TD2] [TD2] 93.00 [/TD2][TD2] 97.21 [/TD2][TD2] 113.65 [/TD2][TD2] 108.65 [/TD2] [TD2] 49.00 [/TD2][TD2] 50.00 [/TD2][TD2] 54.00 [/TD2][TD2] 54.30 [/TD2] [TD2]1,375,470[/TD2][TD2]1,545,857[/TD2][TD2]1,219,184[/TD2][TD2]2,604,255[/TD2] [TD2]3,484,642[/TD2][TD2]3,575,051[/TD2][TD2]2,574,076[/TD2][TD2]3,374,248[/TD2] [TD2]211,093[/TD2][TD2]208,362[/TD2][TD2]215,120[/TD2][TD2]249,748[/TD2] [TD2]126,400[/TD2][TD2]111,219[/TD2][TD2]215,981[/TD2][TD2]94,968[/TD2] [TD2]0[/TD2][TD2]-64,100[/TD2][TD2]-500,500[/TD2][TD2]0[/TD2] [TD2] 5,197,605 [/TD2][TD2] 5,376,389 [/TD2][TD2] 3,723,861 [/TD2][TD2] 6,323,219 [/TD2] [TD2]265,000[/TD2][TD2]244,850[/TD2][TD2]129,094[/TD2][TD2]131,497[/TD2] [TD2]103,208[/TD2][TD2]123,358[/TD2][TD2]195,567[/TD2][TD2]240,000[/TD2] [TD2]0[/TD2][TD2]0[/TD2][TD2]0[/TD2][TD2]0[/TD2] [TD2]645,000[/TD2][TD2]605,079[/TD2][TD2]492,942[/TD2][TD2]531,157[/TD2] [TD2] 6,210,813 [/TD2][TD2] 6,349,676 [/TD2][TD2] 4,541,464 [/TD2][TD2] 7,225,873 [/TD2] [TD2]1,127,885[/TD2][TD2]1,264,570[/TD2][TD2]1,051,304[/TD2][TD2]1,908,505[/TD2] [TD2]2,927,099[/TD2][TD2]3,038,793[/TD2][TD2]2,213,705[/TD2][TD2]2,750,012[/TD2] [TD2]109,768[/TD2][TD2]106,322[/TD2][TD2]117,092[/TD2][TD2]127,731[/TD2] [TD2]0[/TD2][TD2]-49,600[/TD2][TD2]-408,800[/TD2][TD2]0[/TD2] [TD2] 4,164,753 [/TD2][TD2] 4,360,085 [/TD2][TD2] 2,973,301 [/TD2][TD2] 4,786,248 [/TD2] [TD2]235,850[/TD2][TD2]224,369[/TD2][TD2]159,456[/TD2][TD2]160,706[/TD2] [TD2]84,631[/TD2][TD2]101,154[/TD2][TD2]157,431[/TD2][TD2]168,000[/TD2] [TD2]11,000[/TD2][TD2]11,000[/TD2][TD2]11,000[/TD2][TD2]11,000[/TD2] [TD2]735,300[/TD2][TD2]732,022[/TD2][TD2]674,533[/TD2][TD2]657,019[/TD2] [TD2] 5,231,534 [/TD2][TD2] 5,428,630 [/TD2][TD2] 3,975,721 [/TD2][TD2] 5,782,973 [/TD2] [TD2] 979,279 [/TD2][TD2] 921,046 [/TD2][TD2] 565,743 [/TD2][TD2] 1,442,900 [/TD2] [TD2]18.0%[/TD2][TD2]18.2%[/TD2][TD2]13.8%[/TD2][TD2]26.7%[/TD2] [TD2]19.9%[/TD2][TD2]18.9%[/TD2][TD2]20.2%[/TD2][TD2]24.3%[/TD2] [TD2]48.0%[/TD2][TD2]49.0%[/TD2][TD2]45.6%[/TD2][TD2]48.9%[/TD2] [TD2]27.7%[/TD2][TD2]26.6%[/TD2][TD2]33.9%[/TD2][TD2]31.0%[/TD2] [TD2]16.0%[/TD2][TD2]15.0%[/TD2][TD2]14.0%[/TD2][TD2]18.5%[/TD2] [TD2]17.9%[/TD2][TD2]17.3%[/TD2][TD2]15.6%[/TD2][TD2]23.2%[/TD2] [TD2]11.0%[/TD2][TD2]8.4%[/TD2][TD2]-23.5%[/TD2][TD2]-22.2%[/TD2] [TD2]18.0%[/TD2][TD2]18.0%[/TD2][TD2]19.5%[/TD2][TD2]30.0%[/TD2] [TD2]-100.0%[/TD2][TD2]-100.0%[/TD2][TD2]-100.0%[/TD2][TD2]-100.0%[/TD2] [TD2]-14.0%[/TD2][TD2]-21.0%[/TD2][TD2]-36.8%[/TD2][TD2]-23.7%[/TD2] [TD2]293,898[/TD2][TD2]293,898[/TD2][TD2]295,174[/TD2][TD2]306,297[/TD2] [TD2]557,261[/TD2][TD2]557,261[/TD2][TD2]573,929[/TD2][TD2]522,452[/TD2] [TD2]25,000[/TD2][TD2]117,345[/TD2][TD2]43,471[/TD2][TD2]5,615[/TD2] [TD2]30,000[/TD2][TD2]30,000[/TD2][TD2]45,000[/TD2][TD2]50,000[/TD2] [TD2]90,000[/TD2][TD2]90,000[/TD2][TD2]130,000[/TD2][TD2]145,000[/TD2] [TD2] 996,159 [/TD2][TD2] 1,088,504 [/TD2][TD2] 1,087,574 [/TD2][TD2] 1,029,364 [/TD2] [TD2] -16,880 [/TD2][TD2] -167,458 [/TD2][TD2] -521,831 [/TD2][TD2] 413,536 [/TD2] [TD2]10,362[/TD2][TD2]10,362[/TD2][TD2]8,762[/TD2][TD2]7,348[/TD2] [TD2]-118,979[/TD2][TD2]-118,979[/TD2][TD2]-104,453[/TD2][TD2]-121,723[/TD2] [TD2]-53,000[/TD2][TD2]-53,000[/TD2][TD2]-53,000[/TD2][TD2]-53,000[/TD2] [TD2]-20,000[/TD2][TD2]-40,756[/TD2][TD2]25,750[/TD2][TD2]-14,205[/TD2] [TD2]0[/TD2][TD2]0[/TD2][TD2]0[/TD2][TD2]0[/TD2] [TD2] -198,497 [/TD2][TD2] -369,831 [/TD2][TD2] -644,772 [/TD2][TD2] 231,956 [/TD2] [TD2]20,000[/TD2][TD2]19,431[/TD2][TD2]22,873[/TD2][TD2]21,878[/TD2] [TD2] -218,497 [/TD2][TD2] -389,262 [/TD2][TD2] -667,645 [/TD2][TD2] 210,078 [/TD2] [TD2]20,000[/TD2][TD2]19,072[/TD2][TD2]34,490[/TD2][TD2]70,595[/TD2] [TD2] -238,497 [/TD2][TD2] -408,334 [/TD2][TD2] -702,135 [/TD2][TD2] 139,483 [/TD2] [TD2]179,000[/TD2][TD2]176,654[/TD2][TD2]172,989[/TD2][TD2]172,026[/TD2] [TD2]179,000[/TD2][TD2]176,654[/TD2][TD2]172,989[/TD2][TD2]179,026[/TD2] [TD2] -1.33 [/TD2][TD2] -2.31 [/TD2][TD2] -4.06 [/TD2][TD2] 0.78 [/TD2] [TD2]-238,497[/TD2][TD2]-408,334[/TD2][TD2]-702,135[/TD2][TD2]139,483[/TD2] [TD2]209,863[/TD2][TD2]209,863[/TD2][TD2]208,378[/TD2][TD2]205,313[/TD2] [TD2]0[/TD2][TD2]0[/TD2][TD2]0[/TD2][TD2]0[/TD2] [TD2]-28,634[/TD2][TD2]-198,471[/TD2][TD2]-493,757[/TD2][TD2]344,796[/TD2] [TD2] -0.16 [/TD2][TD2] -1.12 [/TD2][TD2] -2.85 [/TD2][TD2] 1.93 [/TD2]

 

[moneyburner1]

Thanks !!!

Very helpful.

How does the surprisingly high lease Accounting influence cash flow?

Doesn`t Tesla have to pay the cost of goods for all this cars and only partly (to match the lease income) book into the P&L as cost?
And they will only receive a small portion as income?

Cheers

 

[luvb2b]

you lose 140m in revenue at 20% gm is like 28m in gross profit but you also lose 90m in one-time charges. that's about 60m.

i also have modeled gross profit improvements (slight) in model 3, service, and storage. those other trends are powerful i think and make up the difference, along with some goosing from deferred revenue recognition.

also some of the revenue drop is due to higher lease accounting percentages.

the most important aspect of this report is demand was flat to up in a quarter it *should* have been lower. us tax credit rolldown, anticipation of china model 3 variant, and generally slowing global conditions should all have put a damper on demand. to increase units without meaningful discounting is quite impressive and maybe means that organic demand is starting to assert itself.

solid organic demand is not in the stock price. and 2020 brings a host of positive profit tailwinds, including deferred revenue recognition, fca credits, china production and sales, and further growth in storage and service margins.

i feel like those items total up to $200m/quarter which makes gaap profits quite likely in 2020 if demand is strong.

the stock sold off so fast after the deliveries cost the tape that it almost had to be algo selling off the factset miss. i think when the sober heads look at these numbers, they're really not that bad - not as good as elon hyped, but not bad.

@luvb2b Thanks for the update. Very much appreciate sharing this.

As you know I am no expert in this, but have a question. If revenues are going down from Q2 to Q3, per your estimate about 140mil or so. Tesla had to sell "more" cars for that lower revenue. How can the bottom line be improving by 160mil?

Even at constant revenue, I would think more cars shipped means lower profits, just the sheer metal will cost more. Here revenue worsened....

 

[Reinhard]

Why do you think solarcity revenues will decline from $123M to $103M in Q3? There was a re-launch of the solar panels in the middle of the quarter. Any significant bump in this would wipe out the projected $28M loss.